Articles Tagged With: FHA Mortgage Loans

August 11, 2015

HUD Mortgage Board Takes Action Against Two Lenders

A press release on the FHA/HUD official site announces HUD action against two Texas-based lenders. HUDNo.15-102, published Monday August 10, 2015, states: “The U.S. Department of Housing and Urban Developments Mortgagee Review Board (MRB) today announced settlement agreements with two Texas mortgage lenders following allegations they engaged in a scheme to charge bogus fees to consumers, which improperly inflated mortgages for borrowers purchasing newly constructed manufactured housing.” 11 violations of FHA lending rules were alleged in the case. According to the press release, the HUD Mortgage Review Board claims, “American Home Free Mortgage, LLC (AHFM) of Prosper, Texas, artificially increased mortgage costs by an average of $12,000 per loan through illegitimate fees paid to a company owned and operated by its sales manager. In addition, HUD alleged that there were | more...

August 7, 2015

FHA Loan Fees Which Are Not Considered Closing Costs

By Joe Wallace

There are a variety of fees and expenses associated with FHA home loans; typical costs that the borrower should be saving up for during the planning stages of a new home loan. The FHA requires a minimum 3.5% down payment, for example, and that down payment is considered separate from the borrower’s closing costs. And then there are expenses which are not considered part of the down payment OR closing costs. The FHA loan rules found in HUD 4155.2 at the time of this writing explain these costs. Discount points (a prepaid amount designed to lower the interest interest rate) are included in such expenses–not a down payment, not a closing cost. Chapter Six of HUD 4155.2 describes discount points as follows: “Discount points charged by the lender on a | more...

August 3, 2015

FHA Reverse Mortgages and the FHA Back To Work Progam

By Joe Wallace

A reader got in touch with us recently about the FHA’s Back To Work program, which was announced in 2013 as a way for lenders to offer FHA mortgage loans to people who have had financial hardship in the past that might otherwise disqualify them from a home loan. Back To Work requires the borrower and lender to work together to document the causes of a pre-foreclosure sale, foreclosure, bankruptcy or other financial hardship to show that the issue was circumstantial and not representative of a borrower’s actual credit worthiness. The following guidance to lenders is from FHA Mortgagee Letter 13-26: “As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost | more...

July 31, 2015

FHA Loan Assumptions

By Joe Wallace

There are people on both sides of a potential loan assumption transaction–home owner and house hunter–who want to know if FHA home loans are assumable. Is it possible for a person who has purchased a home with an FHA mortgage loan to sign that loan over to someone else and allow them to assume responsibility for the loan and take ownership of the home? FHA loan rules say that loan assumptions are permitted for FHA single family home loans. Depending on when the loan was issued, there may be different requirements. For example, “If the loan application was signed by the borrower before December 1, 1986, the FHA-insured mortgage generally contains no restrictions on assumability.” That information is found in HUD 4155.2 Chapter Three and basically allows the loan assumption | more...

July 23, 2015

FHA Loan Down Payments: How Your Lender Verifies Cash Saved At Home

By Joe Wallace

In our previous blog post we discussed some of the rules for down payment funds on an FHA home loan. Did you know the FHA requires its participating lenders to verify the sources of all down payment money? This is to prevent funds coming from unacceptable sources such as credit card cash advances or payday loans. Borrowers are permitted to bring in a down payment with money saved at home, but the FHA loan rulebook has specific instructions to the lender about how this type of down payment money is to be verified and handled. Chapter Five of HUD 4155.1 tells the lender that money saved at home should be verified with help from the borrower who must provide specific information about the funds. “To verify cash saved at home, | more...

July 21, 2015

FHA Mortgage Loan Myths

By Joe Wallace

From time to time we get asked questions about FHA loans that reflect common misconceptions and myths about the program. Borrowers sometimes assume things about FHA single family home loans that aren’t true and it’s always a good idea to post some basic facts about the program from time to time to remind people what’s true and untrue about FHA mortgages. FHA loans, for example, aren’t limited to people on fixed incomes, or to those who must demonstrate a need for a non-conventional loan. FHA mortgages are open to all qualified applicants. Your FICO scores, job history, debt-to-income ratio and other financial qualifications are what determine your ability to get an FHA loan. There is no such thing as earning “too much income” for an FHA loan. There’s also no | more...

July 11, 2015

FHA Loan Mortgage Interest Rate Trends: Moving Up

By Joe Wallace

FHA and conventional mortgage loan interest rates had a rocky week. On Friday rates moved higher for the second day in a row, which has erased the progress we had seen in the rates since investors started worrying about more significant stock market woes in China. Overseas economic developments can and do influence mortgage loan rates, but that influence can be fickle and subject to change. What looked dire a day or two ago (and gave some welcome downward movement in mortgage loan interest rates) is now suddenly no longer as much of a factor where FHA mortgage rates are concerned. 30-year fixed rate conventional mortgage loan interest rates had been flirting with the bottom of the four percent range, best execution. Now those rates are back up to a | more...

July 3, 2015

FHA Home Loans: Pre-Purchase Counseling, HECM Loan Counseling

By Joe Wallace

We often write posts that encourage borrowers to examine their pre-purchase counseling options before starting on the journey to apply for an FHA mortgage loan. We also write posts for eligible Home Equity Conversion Mortgage (HECM) loan applicants discussing HECM loan counseling. Some borrowers might wonder what the difference is between the two. There are some obvious differences. HECM loans are a type of refinancing loan for eligible borrowers aged 62 and older that requires no monthly payments and comes due when the borrower dies or sells the home. FHA single family home “purchase loans” are for borrowers looking to buy a home with an FHA guaranteed mortgage. So up front, many of the concerns a borrower has with a new purchase loan differ greatly than those for any refinance | more...

July 2, 2015

Mortgage Loan Closing: How Difficult Is It?

By Joe Wallace

Every home loan is different. When you apply for an FHA mortgage, you may experience a variety of circumstances along the way that can affect how simple or difficult it is to get to your closing date. Borrowers who prepare ahead of time, who get pre-purchase counseling, and learn from the mistakes of their fellow house-hunters can make the entire process simpler and easier to deal with. That’s one reason why the FHA has a list of resources on its official site (www.fha.gov) aimed at advising new borrowers, but the FHA and HUD are not the only government agencies that offer such assistance. The Consumer Financial Protection Bureau (CFPB) also has a wealth of resources aimed at helping consumers in general, but they also have a special section for house | more...

June 25, 2015

FHA Mortgage Rate Trends: Sideways

By Joe Wallace

After small-but-steady improvement recently, rates opened the week with a jump higher that wiped out the previous improvements, and by Wednesday mortgage loan rates have been wavering back and forth, more or less holding the same position when all is said and done. 30-year fixed rate conventional mortgages are up for 4.125% best execution, and we’re still seeing FHA mortgage loan rates holding a best execution comfort zone of 3.75%. As we always point out, best execution rates are offered to those applicants with the most ideal financial qualifications. Your own experience will depend greatly on FICO scores, your credit history and other factors. FHA mortgage loan rates can vary more among participating lenders than their 30-year fixed rate conventional counterparts. FHA rates have been in the 3.75% best execution | more...